LaSalle raising $2 bln Asia property fund

By Dominic Whiting, Asia property correspondent

HONG KONG, Reuters) - LaSalle Investment Management, a unit of U.S. property services group Jones Lang LaSalle (JLL.N: Quote, Profile , Research), is raising a $2 billion Asia property fund and a $750 million fund for logistics buildings in Japan, an executive said on Monday.

The pan-Asia fund will be similar to an "opportunistic" fund, now being wound down by LaSalle, that gave investors internal rates of return (IRRs) of over 25 percent.

LaSalle hopes to draw the same investors from North America, the Middle East and Europe to the new fund but also wants to attract more Asian interest.

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LaSalle raising $2 bln Asia property fund

"We're in the market softly with them at the moment," LaSalle's head of client services in Asia, Philip Levinson, told Reuters.

Levinson said the main focus of the Asian fund would be Japan, South Korea, Singapore, Hong Kong and China.

LaSalle's wider strategy in Asia involves trying to tap growing demand for hotels because of a boom in Chinese overseas travel, building warehouses to cater for new trade links especially in north Asia and developing housing for Asia's rising middle class.

A spate of new funds are targeting Asia as Western institutional investors such as pension funds and insurance firms look to diversify and increase their exposure to property to around 15-20 percent from a typical 10 percent

Direct investment in Asia-Pacific property totalled $43 billion in the first half of 2006, up 40 percent from a year earlier, according to consultants Jones Lang LaSalle.

And industry experts believe the full-year figure was close to $100 billion of investment, with cross-border flows accounting for about one third.

The momentum is continuing this year. Citigroup Property Investors has raised a $1.29 billion fund, ING Real Estate is creating two $1 billion Asia property funds this year and Invesco is planning a $300 million fund for Japan and China.

LaSalle also unveiled Asia's first open-end property fund last week -- a $1 billion pool set up jointly with the property investment unit of British insurer Prudential (PRU.L: Quote, Profile , Research).


U.S. private equity players the Blackstone Group [BG.UL] and Morgan Stanley Real Estate Funds are raising giant global funds, of $10 billion and $8 billion respectively.